Cryptocurrency is absolutely on fire these days and many investors are looking to profit on its white-hot rise. Well-known cryptos such as Bitcoin have surged again, and other popular digital currencies are rallying, too. Experienced traders have been speculating on crypto for years, but what if you’re new to the market and looking to get a piece of the action?
Here’s how to start investing in cryptocurrency and what you need to watch out for.
5 steps for investing in cryptocurrency
First things first, if you’re looking to invest in crypto, you need to have all your finances in order. That means having an emergency fund in place, a manageable level of debt and ideally a diversified portfolio of investments. Your crypto investments can become one more part of your portfolio, one that helps raise your total returns, hopefully.
Pay attention to these five other things as you’re starting to invest in cryptocurrencies.
1. Understand what you’re investing in
As you would for any investment, understand exactly what you’re investing in. If you’re buying stocks, it’s important to read the prospectus and analyze the companies thoroughly. Plan to do the same with any cryptocurrencies, since there are literally thousands of them, they all function differently and new ones are being created every day. You need to understand the investment case for each trade.